Offset Mortgage – The Savers Choice

The newspapers are full of news of Brits in debt - the latest numbers show that the UK has amassed a total national debt of £1.4 trillion* - but what about those who are not living in debt? There are plenty of people in the UK who save and are prudent borrowers - and they are the ones who could benefit from an offset mortgage. But what is an offset mortgage? And how can it help savers? What does it do? And how can these sensible Brits get their hands on one?

An offset mortgage works with your savings by offsetting the mortgage amount against the amount you have saved. For example, if you have £25,000 in savings you can offset them against your £100,000 so as your mortgage repayments reflect an £75,000 mortgage. So your savings will work for you - for example, if you have an offset mortgage at 5%, that £25,000 offset against the loan will save you £1,250 a year.

And the more you save, the more you save on your offset mortgage - another £5000 will save another £250 a year - an offset is truly the best way to save with your savings. And as every good saver will tell you, there is nothing like a financial reward to make you save even more. You have had to work hard to save in these times of inflating living costs and stagnant wages - so with an offset mortgage you can put your feet up and watch your savings save for you for once.

Offset saves in more ways than one. As well as the reduced monthly bills, there are even tax savings with an offset mortgage - the taxes you have avoided by putting your money into an offset mortgage account means you save even more every month. These days everyone is looking for ways to hold onto their earnings and a tax-avoiding mortgage is a great way to achieve this.

With all the savings you have amassed, there is always the choice of just opting for a cheaper regular mortgage, but with an offset mortgage the money is still within reach - if you need your savings for any reason you can just use them, albeit sacrificing your cheaper monthly rate. An offset mortgage allows for all eventualities.

An offset mortgage is also a great way to save money by consolidating debts - an offset mortgage account can incorporate any other loans or credit card debts you may have, in affect slashing your repayments - an offset mortgage will always have a more competitive rate than a personal loan or a credit card.

The Government is always telling us to save - the economy cannot handle millions of Brits living on credit forever - so take their advice and find out if you could benefit from an offset mortgage. Your savings will never work as hard as they will with an offset mortgage, giving you the opportunity to invest further, pay back your mortgage faster or just enjoy the money that you are saving each month.

*CreditAction, May 2008